How pot companies will destroy tons of weed they can’t sell after marijuana fire sales

Since new state regulations went into effect on July 1, California pot shops are prohibited from selling cannabis that doesn’t meet new testing and packaging standards or that exceeds new THC limits. Businesses hurried to sell tens of thousands of dollars worth of inventory by the end of June. But after the fire sales, many cannabis companies are facing a burning question: What to do with the leftovers?

“It’s the part of the cannabis industry that nobody thinks about,” said Laura Turner, who owns a cannabis waste disposal company in Santa Ysabel.

Strict regulations shape how legal cannabis businesses in California grow, process and sell cannabis – and how they destroy it, too. But waste disposal can be the last thing on a business owner’s mind.

“They’re either stockpiling it and storing it somewhere until they can figure out what to do with it,” Turner said, “or they’re packing it up and driving it to another business’s dumpsters.”

According to a calculation by the United Cannabis Business Association, California marijuana companies are poised to lose an estimated $367 million, either by destroying products or discounting them steeply before July 1.

Sometimes cannabis has to be destroyed because it hasn’t been tested for chemicals and contaminants. In other cases, it’s mislabeled, it’s not placed in child-resistant, tamper-evident packaging, or it contains more THC than permitted under state rules.

Many of the goods are leftover from 2017 before California fully legalized cannabis. Companies raced to grow and extract marijuana in the lead-up to Jan. 1, 2018, anticipating more sales when the market expanded from medical-use patients to all adults. But some dispensaries didn’t sell all of the non-compliant marijuana before July 1, which marked the end of a six-month grace period to sell products that don’t meet packaging, labeling and testing criteria.

California regulations aim to keep cannabis waste in the trash and off the streets.

By the letter of the law, businesses must lock away cannabis waste in a secured area or a bin only employees and authorized trash collectors can access. They have to render it “unrecognizable and unusable.” And they’re supposed to record who threw out their goods and why, as well as keep receipts confirming how much waste they’ve disposed of.

Dispensary owners interviewed by The Desert Sun said they managed to sell most of their non-compliant pot before July 1 – but even after running steep discounts in the waning days of June, some said they still have inventory that needs to be destroyed.

Philip Norman, the owner of Mother Earth’s Farmacy in Cathedral City, said his shop risked scrapping half of its inventory after July 1. Luckily, Norman struck a deal to return products in non-compliant packaging to vendors, who will swap out the packaging instead of throwing the products away.

“It’s 50 percent being returned instead of 50 percent going to the trash,” he said. “Our store looks a little bare, but we still have everything we need.”

Tim Morland, Director of Compliance and Policy at River Wellness, a cannabis distributor, said his company sold most of the inventory it had left from 2017 but estimated it still will have enough non-compliant cannabis to fill a 55-gallon drum.

“I feel sad that all this product has to be destroyed,” he said. “There’s not a legal avenue for this product to go to a compassion program, or veterans suffering from PTSD.”

Waste disposal isn’t a one-time problem for companies looking to unload non-compliant marijuana they weren’t able to sell by the end of June.

What to do with unsold cannabis – as well as portions of the plant discarded during processing – is creating a cottage industry of waste disposal companies specializing in marijuana.

One solution is composting. Turner’s company, CWR SoCal Inc., recycles marijuana products, including edibles and even vape pen cartridges. Her company gives customers recycling bins, where the client blends its cannabis waste with a bran mix. Then, CWR SoCal adds more organic materials to the waste, hauls it away and turns it all into compost.

GAIACA Waste Revitalization, a Del Rey Oaks company, is also recycling cannabis and its byproducts. The company estimates it has collected 150,000 pounds of waste over the past five months.

“We definitely saw a surge of inquiries and sign-ups around the July 1st date,” said co-founder Jonathan Lee.

Composting isn’t the only way. Andrew McGinty is the founder of Lancaster-based Cannabis Waste Solutions, which collects cannabis waste, mixes it with biomass like wood scraps and delivers it to a generator facility to burn for electricity.

But McGinty said he thinks many cannabis companies won’t change the way they throw out waste – or how they run their businesses in general – until the state releases final regulations. The Bureau of Cannabis Control is currently operating under emergency regulations but will have final rules in place by the end of 2018.

In the meantime, McGinty has heard of growers composting on-site and urban manufacturers shredding, double-bagging and plunking trash into the nearest dumpster.

He suspects some companies are quietly diverting non-compliant pot to the black market, too.

“Everyone’s still underground, it seems like,” he said.

Amy DiPierro covers real estate and business news at The Desert Sun in Palm Springs. Send her a message at [email protected] or 760-218-2359. Follow her on Twitter @amydipierro.